Credit card warning minimum payments

Thu, 19 Jul 2007

UK credit card customers have been warned that they face a "debt sentence" if they only pay off the minimum amount each month.

Financial services advice group uSwitch claimed that about one in ten UK credit card users only pays the minimum, thereby extending the life of their debt and the total interest they will be liable to pay.

Moreover, some credit card companies are even cutting the minimum payments necessary for their customers, including Barclaycard and Marks & Spencer Money, said uSwitch.

Mike Naylor, a personal finance expert at uSwitch, noted that credit card bills could now last longer than mortgages, as minimum payments are so low.

"Despite the introduction of health warnings on credit card statements, the implications of making the minimum repayment each month are still not clear enough to consumers," he added.

He also called upon all credit card providers to introduce a minimum payment level of three per cent so that consumers would be able to pay off their debt more quickly.

Recent research from Apacs found that the growth in credit card usage is causing Brits to use fewer cheques.


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